By Mark Edward Nero
Hanjin Shipping, the world’s seventh largest container carrier, filed a receivership application with the Seoul, South Korea Central District Court on Aug. 31 seeking court receivership after losing the support of financial institutions that had been providing it credit.
The company also stopped accepting new shipments in the wake of the filing, including at the Port of Long Beach’s Total Terminals Intl., in which Hanjin owns a majority stake.
Multiple banks, including state-run Korea Development Bank, withdrew backing for Hanjin on Aug. 30, stating that a funding plan was inadequate to tackle the company’s roughly $5 billion in debt.
The Central District Court, which accepted the receivership allocation on Sept. 1, will now decide whether Hanjin Shipping should remain in business or be dissolved. The process usually takes up to two months.
Financial problems, which have ailed the South Korea-based shipper for some time, reached a peak over the past week. Workers in the Korean port of Busan refused to work on a ship in recent days because the company hasn’t paid dues, forcing the cancellation of a berthing.
This led to three of Hanjin’s vessels being idled off the Los Angeles-Long Beach port complex this week, while one was stranded near the Port of Prince Rupert in British Columbia.
Another vessel was seized in Singapore on Aug. 29, while about 10 more were impounded at Chinese ports, for failing to pay service providers, according to the Korea International Trade Association.
According to South Korea’s Financial Services Commission, Hyundai Merchant Marine, which is the country’s second largest shipping line, will look to acquire Hanjin’s healthy assets, including profit-creating vessels and overseas business networks.